06 ohp slides 1

Merchandising Operations

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MERCHANDISING OPERATIONS

Nature of Merchandising Business

Sales

– Cost of Goods Sold

Gross Profit

- Operating Expenses

Net Income

The Operating Cycle

Purchasing

Activity

Production

Activity

Sales

Activity

Collection

Activity


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Financial Statements for a Merchandising

Business

Multi-Step Income Statement

o Sales

o Sales returns and allowances

o Sales discounts

o Net sales

o Cost of goods sold

o Gross profit

o Other income and expense


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Financial Statements for a Merchandising

Business

Single-Step Income Statement

Statement of Owner’s Equity

Balance Sheet – Report Form


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Sales Transactions

Cash Sales

Cash xxx

Sales xxx

To record cash sales.

Cost of Goods Sold xxx

Inventory xxx

To record the cost of goods sold.

Credit card expense xxx

Cash xxx

To record service charges on credit card

sales.


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Sales Transactions


Inventory xxx


Accounts receivable xxx

Sales xxx

To record credit card sales


Inventory xxx


Cash xxx

Credit card expense xxx


Accounts Receivable xxx

Sales xxx

To record sales on account.

Sales on Account


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Sales Transactions

Sales returns & allowances xxx


To record credit memo.

Inventory xxx


Cost of merchandise returned, Credit Memo.

Cash xxx

Sales Discounts xxx


Collection on receivable, less discount.

Sales returns & allowances xxx

Cash xxx

Sales Discount

Sales Returns & Allowances


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Sales Transactions

Credit Terms

Invoice for

P15,00

Terms:

2/10, n/30

If invoice is paid

within 10 days

of invoice date

If invoice is NOT

paid within 10

days of invoice

date

2% of invoice

amount is

allowed as a

cash discount

Full amount is

due within 30

days of

invoice date

P14,700

paid

P15,000

paid


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Purchase Transactions

Purchases Discount

Inventory xxx

Cash xxx

Purchases inventory from seller.

Inventory xxx

Accounts payable xxx

Purchase inventory on account.

Inventory xxx



Cash xxx

Inventory xxx


Cash xxx


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Purchase Transactions

Purchases Returns and Allowances


Inventory xxx

Inventory xxx


Purchased merchandise.


Inventory xxx

Returned portion of merchandise purchased.


Cash xxx

Inventory xxx

Paid invoice.


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TERM

S:

FO

B D

ESTIN

ATIO

N

TERM

S:

FO

B D

ESTIN

ATIO

N

Tra

nsp

ort

ati

on C

ost

s, S

ale

s Taxes

and T

rade D

iscounts

Seller

Ship

pin

g P

oin

t

Buyer

Dest

inati

on

Tra

nsp

ort

ati

on T

erm

s

Seller

pays

freig

ht

cost

and d

ebit

s Tr

ansp

ort

ati

on O

ut

Buyer

pays

freig

ht

cost

s and d

ebit

s In

vento

ry

TIT

LE

pass

es

to b

uyer

TIT

LE

pass

es

to b

uyer

Fre

ight

cost

Fre

ight

cost


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Transportation Costs, Sales Taxes and Trade

Discounts

Inventory xxx


Purchased merchandise, terms FOB shipping

point.

Inventory xxx

Cash xxx

Paid shipping cost on merchandise purchased.

Sales Tax


Sales xxx

Sales tax payable xxx

Sales tax payable xxx

Cash xxx

Payment for sales tax collected during the nth

month.


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Merchandise Inventory Shrinkage

Adjusting entry

Cost of goods sold xxx

Inventory xxx

06 ohp slides 1

Business

Transcript of 06 ohp slides 1